Sartini calls Golden Gaming merger ‘good strategic fit’
Blake Sartini said Golden Gaming’s planned transition into a publicly traded company was about timing.
So far, the CEO’s sense of timing has never been questioned.
The merger with Minnesota-based Lakes Entertainment will result in the company — recognized as Nevada’s largest slot machine route operator and tavern owner — acquiring a casino in Maryland and assuming Lakes’ listing on the Nasdaq.
As part of the transaction, Sartini and his family — 100 percent owners of Golden Gaming — will be given 35.7 percent ownership in the newly formed Golden Entertainment. Current Lakes shareholders will receive the remaining 64.3 percent.
“It’s absolutely a transitional transaction for us to go from a private to public company,” Sartini said in an interview Tuesday. “The opportunity was very appealing. We felt it was a good strategic fit.”
Sartini will be chairman and CEO of the new company.
The merger, which requires regulatory and shareholder approval, marks the company’s most significant transaction since 2011. Golden Gaming sold its three casinos in Colorado to Affinity Gaming and acquired the company’s Nevada slot machine route operation and two casinos in Pahrump.
The transaction tripled the size of Golden’s slot machine route operation.
“We felt at that time, the timing was right to bet on a Nevada rebound,” Sartini said. “The structure of this deal allows us a more efficient use of capital and the timing is right to drive value as a publicly traded company.”
Sartini was a board member of Station Casinos when the company was listed on New York Stock Exchange. His wife is the sister of Station Casinos’ principals Frank Fertitta III and Lorenzo Fertitta.
He said Golden would add a yet-to-be determined number of jobs to its Las Vegas headquarters in accounting, finance and other positions to meet Securities and Exchange Commission requirements for a public company.
Lakes Entertainment brings to the deal a balance sheet with $80.7 million in cash as of the third quarter and the Rocky Gap Resort in Cumberland, Md. The 200-room hotel-casino is inside the Rocky Gap State Park, overlooks a lake and include a Jack Nicklaus Signature golf course.
According to the Maryland Gaming Control Board, Rocky Gap collected $43.2 million in gaming revenue in 2014, which included a 17 percent increase in December. The small casino had 4.6 percent of Maryland’s overall market, but is considered more of a destination resort and doesn’t compete in the busy Baltimore-Washington gaming corridor.
“The property was very attractive to our current portfolio,” Sartini said. “It is within a three-hour drive for 10 million people.”
Rocky Gap also means a renewed push by Golden Gaming into regional markets. Lakes Entertainment Chairman and CEO Lyle Berman is expected to help in that effort. He’ll join Golden Entertainment as a board member and consultant. Berman currently owns 27 percent of Lakes.
Lakes has previously operated casinos and racetracks in Maryland, Ohio, Kentucky and other regional markets.
“Lyle’s gaming history speaks for itself,” Sartini said. “He’ll be a tremendous resource. He has a vast network of contacts.”
Last summer, Lakes Entertainment hired Macquarie Capital to evaluate “strategic alternatives,” including a sale or a merger. Sartini said the company received between 45 and 50 inquiries and narrowed it down to the Golden Gaming offer.
Golden Gaming has been on an upswing in the past year. The company purchased four taverns in Las Vegas in October, creating an additional brand — Sean Patrick’s — to go with PT’s, Sierra Gold and Sierra Junction. In December 2013, the company bought a Reno-based slot machine route operator.
The merged Golden Entertainment will operate more than 8,000 slot machines and video lottery terminals in Nevada and Maryland. In Nevada, Golden has 48 taverns and operates 7,600 slot machines in 600 statewide locations through its route operation.
“We remain committed to Nevada,” said Sartini about the state where the company employs 2,100 workers. “We see opportunity to expand here.”
The proposed merger is expected to close by the end of the year.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter: @howardstutz.
